Still, consumer confidence grows
Growth in rent and mortgage spending reached its highest rate in over a year, with a 6.4% increase in October, according to the latest Barclays Property Insights report.
Despite this rise, UK consumer confidence in the housing market and their ability to afford monthly payments hit its highest level in 2024, while concerns about rising costs fell to their lowest point since April.
The report showed that 55% of UK residents feel confident they can meet their monthly rent or mortgage obligations, up from 53% in September.
Concerns about interest rate increases have stabilised, with 60% of respondents expressing worry, a drop from the peak of 63% in June, after the Bank of England held the base rate at 5% in September.
In terms of household expenses, 79% of respondents expressed concern about rising energy costs, with 42% worried about higher household bills.
Despite these concerns, spending on utilities dropped by 13% year-on-year, suggesting that consumers are conserving energy or cutting costs where possible. This decline in utility spending comes despite an increase in the energy price cap on October 1, which has still kept prices below 2023 levels.
The Barclays report also revealed that a quarter (26%) of renters have confidence in the housing market, and 21% feel the recent decrease in inflation has improved their ability to afford housing costs.
Younger renters, especially those aged 18 to 34, are more optimistic, with nearly half believing they could become homeowners within the next five years. However, this optimism wanes among older renters, with only 28% of those aged 35 to 54 expressing the same outlook.
Barriers to homeownership remain significant, with 69% of renters citing high property prices as the primary obstacle, followed by 60% who point to deposit costs. In addition, 32% of renters reported an increase in their rent payments over the past year, making it harder to save for a deposit.
Meanwhile, a growing number of UK residents are considering relocating, with 18% of survey respondents indicating plans to move within the next year. Younger adults are leading this trend, with 33% of 18- to 34-year-olds looking to relocate, primarily to urban areas (30%) rather than the countryside (23%) or the coast (20%).
Among those currently living rent-free with family or friends, 40% prefer a move to urban locations, possibly indicating a shift related to employment or lifestyle aspirations. Renters are more inclined towards countryside relocations (28%), while homeowners express a preference for city living (31%). Additionally, 15% of respondents considering relocation are looking to move abroad.
For those planning a move, the main motivations include saving money (28%), improving lifestyle or well-being (27%), and being closer to family or friends (21%). Downsizing is a priority for nearly one in five movers, with the proportion rising to 37% among those over 55. Barclays’ recent Right-sizing Revolution report suggests that policies incentivising downsizing could potentially free up 3.8 million homes in the market.
Although spending on home improvements and DIY fell by 7.7% compared to 2023, 44% of respondents said they are considering renovations or redecorating. A quarter of homeowners (27%) see property upgrades as a way to increase their home’s sale value, while 20% worry about achieving their desired sale price.
However, certain home design features continue to deter prospective buyers. The re-emergence of avocado bathroom suites topped the list of turn-offs, with 27% of respondents viewing them negatively, a sentiment shared particularly among over-55s (35%). Shaggy carpets and textured wallpaper were also cited as undesirable features by 17% of those surveyed.
“The housing market can be fickle, with housing trends and macro-economic factors having a direct impact on the monthly outgoings of millions of Brits,” said Mark Arnold (pictured), head of mortgages and savings at Barclays. “However, what truly drives the state of play is how confident consumers are feeling. Whether contemplating a relocation, purchasing a first home or redecorating, we can see that Brits have growing faith both in the housing market and in their ability to spend.
“While spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes. Even if interest rates fall as predicted, if this confidence is to be rewarded, more needs to be done to unlock greater capacity in the market to help drive down some of the financial barriers facing renters and homeowners as we look ahead to 2025.”
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